Question

During the course of a​ year, the labor force consists of the same 1,165 people. Of​ these 22 lack skills that employers desire and hence remain unemployed throughout the year. At the same​ time, every month during the​ year, 24 different people become​unemployed, and 24 other different people who were unemployed find jobs. There is no cyclical unemployment.

c. Suppose that a system of unemployment compensation is established. Each​ month, 24 new people​ (not including the 22 lacking required​ skills) continue to become​ unemployed, but each monthly group of newly unemployed now takes two months to find a job. Calculate the frictional unemployment rate after this change.

_______​%.

​(Enter your response as a percentage rounded to two decimal​ places).

Answer 1

Answer- The frictional unemployment rate is calculated by dividing the workers actively looking for jobs by the total labor force. The workers actively looking for jobs are typically classified into three categories: workers who left their job, people returning to the workforce, and new entrants.

The workers actively looking for jobs = 24 other different people who were unemployed find jobs + 24 new people​, now takes two months to find a job

                                                       = 24 + 24

                                                       = 48

The workers actively looking for jobs = 48

The total labor force = 1,165

The frictional unemployment rate = (The workers actively looking for jobs / The total labor force) * 100

                                                 = (48 / 1165) * 100

                                                 = 0.041 * 100

                                                 = 4.12

The frictional unemployment rate after this change is 4.12 %.